Gardenia, the country’s largest bread producer, is experiencing an abnormally high growth of 20-35 percent in sales in the first two quarters as consumers were on panic buying and trying to stock up food during the harsh lockdown period.
Gardenia Bakeries Philippines Inc. President and General Manager Simplicio Umali Jr. reported that its sales shoot up 20-35 percent in the second quarter this year from 5 percent growth in the first quarter.
Umali cited of an abnormally high demand during the April-May period as consumers, to a certain point, were panic buying. Demand, however, has somehow stabilized in June and July months, but growth was expected to be still better than the first quarter.
With the strong demand, Gardenia has responded by making all their factories operational 24-hours daily since March this year and producing at 90-95 percent production capacity.
On normal period, Gardenia’s sales growth just average 5-10 percent annually. Overall, the market has expanded by 10 percent but Gardenia got the bulk of that as other bakeries, especially the small ones, had to close operation because of supply chain issue.
With its fully-automated plants, Gardenia was able to continuously produce from the time the Enhanced Community Quarantine was first imposed middle of March this year.
Aside from being a HACCP and ISO-certified, Gardenia also imposed additional health protocols to workers.
Umali said that prices of imported ingredients have increased due to tight supply of raw materials, but prices of flour have remained stable. This should enable the company to hold off any price increase pressures until the end of the year.
Meantime, consumer advocacy group Laban Konsyumer Inc. (LKI) has urged for the implementation of mobile “kadiwa” stores that sell basic bread direct to communities.
LKI President Victorio Mario Dimagiba said this as more community bakers have stopped operation for lack of customers and problems of supply for their ingredients.
“Based on recent developments, the poor sector are no longer eating bread because it is expensive and they are shifting to rice as well as instant noodles and other substitutes such as boiled eggs and bananas. Micro and small bakeries are affected and most of them have closed shops,” said Dimagiba.
This was also confirmed by Chito Chavez, former spokesperson of the Federation of Philippine Bakers. “I don’t what happened but there are no buyers of bread in the communities anymore,” he said.
He could only surmise that consumers have stopped buying because they have no money or they could have been baking bread on their own.
“The community bakers need support on how they can be able to recover, open again and get back to their feet soon,” said Dimagiba as he recommended that big bakers can supply the small bakers with
bread for distribution in their communities.
Dimagiba suggested an innovative program he called “Borrow and Loan Program” or “Give and Take” in the bread sector during this difficult time.
Big Boys of the bread industry such as Gardenia, French Baker, Sari Rote and Marby as well as the flour industry of San Miguel, Concepcion, Foremost, Liberty extend and exert efforts in the recovery of the bread and bakery industry.
Dimagiba recalled that in the past the flour industry produced and sold quality flour at reduced prices but to community panaderos, and also extended lenient payment terms. Big Bakers can in turn share training and expertise in an efficient, effective and reasonable manner on a pro bono basis. He said the Big Boys should increase the production and market share of Pinoy tasty and Pinoy pandesal over their own brand.
“Many experts have advised business to prioritize cash flow than the profit and loss statement during these times. The suggested program should wholly led and solely by the flour and bread industry. Everybody survives,” he said.
Dimagiba also withdrew LKI’s call for rollback of bread prices amid the shutdown of community bakers, and low prices of flour.
Prices of the premium flour have remained at all time low of P720.00 per bag from a high of P920.00 per bag almost two years ago. Given that flour is 75 percent of the cost component of bread, the lower prices of flour must translate to overall lower charges to end consumers. The other raw materials are sugar and shortening. The rule of thumb is actually for every 40 peso per bag reduction in flour prices, this should be equal to a 1 peso rollback in the retail prices of bread.
Instead of rollback in prices, Dimagiba said the big boys in the industry should be able to share their rich resources and treasures in this lingering pandemic that hits the micro and small community bakeries in the country. “The spirit of collaboration and cooperation should prevail and that the stakeholders can be able to formulate a recovery plan among themselves in an efficient, effective and reasonable measures,” he said.